Income Taxes (Tables)

12 Months Ended

Dec. 31, 2014

Our income tax provision includes the following components:

	For the Years Ended December 31,
(in millions)	2014			2013		2012
Current tax provision	$	5.2		$	32.7	$	9.4
Deferred tax provision related to:
Future tax deductions		58.4			0.1		2.9
Valuation allowance change		(30.8	)		3.7		2.1
Income tax provision	$	32.8		$	36.5	$	14.4

Schedule of Pre-Tax Income (Loss) and Effective Income Tax Rates

For the years ended December 31, 2014, 2013 and 2012, pre-tax income (loss) attributable to our operations and the operations’ effective tax rates were as follows:

(in millions)	2014							2013							2012
	Pre-Tax Income (Loss)				Effective Tax Rate			Pre-Tax Income (Loss)				Effective Tax Rate			Pre-Tax Income (Loss)				Effective Tax Rate
Bermuda	$	102.8				0.0	%	$	50.5				0.0	%	$	10.0				0.0	%
United States		98.0				28.1	%		120.9				28.2	%		52.0				21.3	%
United Kingdom		21.5				24.8	%		18.5				12.0	%		14.0				24.4	%
Belgium		—		⁽¹⁾		63.8	%		0.2				103.0	%		(0.1	)			98.4	%
Brazil		(2.2	)			0.0	%		(9.7	)			0.0	%		(6.5	)			0.0	%
United Arab Emirates		(0.9	)			0.0	%		1.1				0.0	%		—		⁽¹⁾		0.0	%
Ireland		(1.1	)			0.0	%		(0.1	)			0.0	%		(0.2	)			0.0	%
Malta		(2.2	)			0.0	%		(1.7	)			0.0	%		(2.6	)			0.0	%
France		—				0.0	%		—				0.0	%		—				0.0	%
Switzerland		0.1				17.6	%		—		⁽¹⁾		5.6	%		0.1				22.8	%
Pre-tax income	$	216.0						$	179.7						$	66.7

⁽¹⁾	Pre-tax income for the respective year was less than $0.1 million.

Reconciliation of Difference Between Provision for Income Taxes and Expected Tax Provision at Weighted Average Tax Rate

A reconciliation of the difference between the provision for income taxes and the expected tax provision at the weighted average tax rate is as follows:

	For the Years Ended December 31,
(in millions)	2014			2013			2012
Income tax provision at expected rate	$	37.2		$	43.1		$	18.5
Tax effect of:
Tax-exempt interest		(4.5	)		(5.6	)		(5.6	)
Dividends received deduction		(2.3	)		(2.3	)		(2.2	)
Valuation allowance change		(30.8	)		3.7			2.1
Other permanent adjustments, net		(0.7	)		0.3			1.8
Adjustment for prior year tax return		(0.9	)		(1.6	)		0.2
Prior period adjustment for deferred		1.5			—			—
United States state tax expense (benefit)		2.5			0.3			(0.3	)
PXRE Reinsurance capital loss carryforward		29.8			—			—
Other foreign adjustments		0.7			(0.1	)		—
Prior year foreign taxes		0.1			1.1			—
Deferred tax rate reduction		(0.4	)		(1.2	)		(0.6	)
Foreign exchange adjustments		0.2			(1.7	)		0.5
Foreign withholding taxes		0.4			0.5			—
Income tax provision	$	32.8		$	36.5		$	14.4
Income tax provision - Foreign	$	5.2		$	2.4		$	3.3
Income tax provision - United States, Federal		23.3			33.2			11.5
Income tax provision (benefit) - United States, state		3.9			0.4			(0.4	)
Foreign withholding tax - United States		0.4			0.5			—
Income tax provision	$	32.8		$	36.5		$	14.4

Schedule of Deferred Tax Assets and Liabilities

	December 31,
(in millions)	2014			2013
Deferred tax assets:
Unrealized losses on fixed maturities and other investment securities	$	—		$	—
Losses and loss adjustment expense reserve discounting		25.1			28.4
Unearned premiums		24.8			23.0
Capital loss carryforward		—			29.8
Allowance for bad debt		2.0			1.9
Accrual for contingent commissions		0.3			0.4
Net operating loss carryforward		18.8			19.8
Impairment of investment values		8.2			10.6
United States amortization of intangible assets		4.3			3.1
Accrued bonus		6.7			5.7
Accrued vacation		1.7			1.6
Stock option expense		8.0			6.4
United Kingdom interest		—			0.8
Brazil operating losses		7.4			8.0
Malta operating losses		2.1			1.7
Depreciable fixed asset		5.2			—
Other		7.0			9.1
Deferred tax assets, gross		121.6			150.3
Deferred tax liabilities:
Unrealized gains on equity securities		(62.3	)		(65.1	)
Unrealized gains on fixed maturities and other investment securities		(15.3	)		(16.1	)
Deferred acquisition costs		(20.3	)		(19.5	)
United States amortization of intangible assets		(3.5	)		(3.3	)
United Kingdom underwriting losses		(9.0	)		(4.8	)
United Kingdom amortization of intangible assets		(2.3	)		(2.8	)
Brussels pension		(0.1	)		(0.2	)
Internally developed software		(21.5	)		—
Unrealized FV gain on LP		(10.5	)		(9.2	)
Other		(4.4	)		(1.8	)
Deferred tax liabilities, gross		(149.2	)		(122.8	)
Deferred tax assets, net before valuation allowance		(27.6	)		27.5
Valuation allowance		(25.4	)		(56.2	)
Deferred tax liabilities, net	$	(53.0	)	$	(28.7	)
Net deferred tax liabilities - Foreign	$	(11.8	)	$	(7.0	)
Net deferred tax liabilities - United States		(41.2	)		(21.7	)
Deferred tax liabilities, net	$	(53.0	)	$	(28.7	)